When working with a staffing agency, one of the first questions employers ask is, “Why is the markup so high?”
It’s a fair question, and one that deserves a clear answer.
Staffing markups are often misunderstood, leading many to assume they’re simply an added cost. However, the reality is that your staffing agency is providing far more than just a worker.
Let’s break down exactly what you’re paying for when you partner with a staffing firm.
The Breakdown of a Staffing Markup
A staffing markup is the percentage added to a worker’s pay rate to cover costs associated with recruiting, employing, and managing that worker.
While markups vary by industry, job type, and market conditions, they typically range between 40% and 70%.
BUT WHAT DOES THAT REALLY INCLUDE?
1. Wages & Payroll Taxes
- The majority of a staffing markup goes directly to the worker in the form of wages.
- Employers are also responsible for payroll taxes such as Social Security, Medicare, federal/state unemployment taxes, and workers’ compensation.
2. Benefits & Compliance
- Many staffing agencies provide benefits like health insurance, holiday pay, and retirement plans, which are included in the markup.
- Compliance with labor laws, safety regulations, and workplace protections also requires dedicated resources.
3. Recruiting & Screening Costs
- The time and effort spent sourcing, vetting, and interviewing candidates adds up.
- Background checks, drug testing, and skills assessments ensure you get a high-quality employee.
4. Administrative & Operational Expenses
- Your staffing partner handles payroll processing, HR support, and employment paperwork.
- They also absorb costs related to job advertising, software systems, and account management.
The Value of a Staffing Agency
When you consider all these factors, staffing markups aren’t just a fee – they’re an investment in workforce quality, speed, and risk reduction. Instead of spending weeks sorting through unqualified applicants or dealing with administrative headaches, you get access to vetted talent ready to work.
By outsourcing your hiring to a staffing agency, you’re not just filling roles – you’re optimizing your workforce with a partner who understands your industry and hiring needs.
